Hot Zones

People Who Need People Who Start Businesses
For Hoffman, Austin Ventures has given him something more than just money and advice. It's the sense that someone is on his side, cheering for him.

That support (or the lack of it) can make all the difference in the world when it comes to building a company. After eight years Peter Metcalf is still galled by the blasé reaction Ventura officials had when Black Diamond announced that it was leaving town. "The local newspaper quoted the mayor as saying, 'So what?' " he recalls.

Compare that with the reception that his company got in Utah, where the governor showed up at the press conference heralding Black Diamond's move. "We're all human," says Metcalf. "It's nice to know you're appreciated."

Hospitality toward entrepreneurs can take many forms. Sometimes all you need is a support infrastructure in place: venture capitalists like Austin Ventures, for example. "You'll also find in a lot of cases that the accountants and lawyers who cater to entrepreneurs are willing to work for a reduced fee or equity in lieu of a fee," says Babson College professor Andrew "Zach" Zacharakis.

Alternatively, a city may simply offer plenty of room for a growing company, simply because it doesn't have a lot of entrenched businesses that suck up resources. "Even when we were starting up, this town was growing, and it still is," says Eric Crown of Tempe's Insight. "When I called up FedEx, the agent was over here in a minute and ready to do business, because the town wasn't full of Fortune 100 companies. This town is not cliquey, and it's easy to enter the fold."

Then there are the rare communities like Silicon Valley, where entrepreneurship reaches the kind of critical mass that feeds, incubates, and grows its own companies at an accelerated rate. "It's not quite networking. It's sort of collaboration, idea generation," says entrepreneurship professor Hal Heaton, a Stanford Ph.D. now teaching at Brigham Young University.

To a greater or lesser extent, the same phenomenon occurs in a number of other communities with the right atmosphere and people. In North Carolina's Research Triangle, Capital Savings' Ballenger says, he's gotten some terrific ideas and established lasting business relationships during casual conversations with friends of friends over dinner.

"You meet a guy who owns a computer-service company, he does IT, and he gives you an idea about a technology for videoconferencing," says Ballenger. His loan officers were soon holding videoconferenced meetings with home buyers. (Recently, the officers switched to Web-based conferencing.) "You get around these people, and that starts sparking new things," Ballenger says. "That's one of the dynamics that make this a neat place."

Getting Out of Town
When Alan Dabbiere was deciding between Charlotte and Atlanta for his company's new home, he paid particular attention to the airport. He had eaten too many airline meals to take potluck on travel facilities. "I was personally on a red-eye every single week for three years," he says.

Even though moving Manhattan Associates from California to the East Coast would bring Dabbiere closer to his customers and cut down on the overnight flights, he and the company's software engineers would still have to visit customers' warehouses all over the eastern half of the United States, not to mention in Europe and on the West Coast. Charlotte was a major U.S. Airways hub, a big point in its favor. But when Dabbiere started looking more closely at flight schedules, he noticed that quite a few of the flights out were timed late to allow for earlier connections to arrive from other places. That meant that it was hard to get a 7 a.m. flight to Chicago (#33 among the large metro areas), for example. On the other hand, he says, "Atlanta has enough of a local population that it could sustain very early and very late destination flying" -- a big part of the reason he eventually picked the larger city.

In North Carolina, Raleigh-Durham International Airport has attracted low-priced Midway Airlines, AirTran Airways, and Southwest Airlines. Todd Ballenger boasts that he can fly anywhere in the continental United States for $325 or less. With those inexpensive flights, Ballenger could keep in close touch with Capital Savings' strategic partners in other states. "That was a huge thing," he says. "It allowed us to expand our business into Ohio and other places."

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